McDonald’s to Exit From Russia After Three Decades

McDonald’s

MCD 0.35%

said in March that it was temporarily closing its 847 restaurants in Russia, while continuing to pay the 62,000 people it employs there. The Chicago-based company owns and operates 84% of its restaurants in Russia, with the rest run by franchisees.

On Monday,

McDonald’s

said that continued ownership of its business in Russia was no longer tenable nor “consistent with McDonald’s values.”

“We have a commitment to our global community and must remain steadfast in our values,” Chief Executive

Chris Kempczinski

said in a statement.

McDonald’s said it would now pursue the sale of its entire portfolio of restaurants in Russia to a local buyer. It said those restaurants would no longer use the McDonald’s name, logo, branding or menu.

Russia’s state-run TASS news agency reported Monday that McDonald’s restaurants in the country would reopen under a different name next month.

In connection with the exit, McDonald’s said it expects to record an accounting charge of between $1.2 billion and $1.4 billion, and recognize a significant foreign currency translation loss.

Russia and Ukraine accounted for around 9% of McDonald’s revenue last year, the company has previously said, given the high percentage of company-owned restaurants in those markets. The countries accounted for 2% of overall sales, and less than 3% of operating income, the chain has said.

McDonald’s owns around 100 restaurants in Ukraine that remain closed.

The company said it would pursue the sale of its entire portfolio of restaurants in Russia to a local buyer.

Western companies across sectors have been under pressure to divest their operations in Russia since the country invaded Ukraine in late February. The invasion triggered waves of sanctions from Western governments that have also made it hard to continue to do business in the country.

Also Monday, French auto maker

Renault SA

reached a deal to cede its 68% stake in Russia’s biggest car maker to a state-backed entity. Renault also said it was transferring ownership of a factory in the center of Moscow, which makes vehicles under the Renault and

Nissan

brands, to the city’s government.

Renault didn’t disclose the financial terms of the deal, but people familiar with the deal said the company was selling both assets for the symbolic sum of one ruble each. The company has a six-year option to buy back its AvtoVAZ shares, the people added.

Other Western companies including oil major

Shell

PLC, German engineering giant

Siemens AG

and Budweiser brewer

Anheuser-Busch InBev SA

have detailed plans to quit Russia in recent weeks.

The departure of McDonald’s is notable given its emblematic arrival during a rush among Western businesses in the 1990s to enter Russia to profit from the country’s move from communism to capitalism. McDonald’s opened its first Russian location in Moscow’s Pushkin Square in 1990, when thousands of locals lined up to get their first taste of the American chain’s burgers and fries.

McDonald’s had first began eyeing the Russian market in the late 1970s, and it took repeated discussions with government officials to provide food for the 1980 Moscow Olympics and, later, open restaurants in the country.

Some of McDonald’s location in Russia eventually became among the chain’s top-performing stores.